Simply put, the lone legal issue
involved in this petition for review is whether, under the facts obtaining in
this case, a final determination of just compensation in an
expropriation proceedings must first be made before an order of
expropriation may be issued by the court. In its Decision[1] of January 27, 2006 in CA-G.R. SP No. 89878, as reiterated in its Resolution[2] of April 10, 2006, the Court
of Appeals (CA) answered the issue in the affirmative.Disagreeing,petitioner
Republic, as represented by the Toll Regulatory Board, has come to this Court via this recourse to seek the
annulment and setting aside of the CA decision and resolution.

But first the facts:

In an effort to ease traffic congestion
on the North Luzon Expressway, petitioner Republic, through the Toll Regulatory
Board, sought to widen the Balintawak Toll Plaza which would necessarily affect
two (2) parcels of land registered under the names of herein respondents
Phil-Ville Development and Housing Corporation (Phil-Ville, for brevity) and Sy
Chi Siong and Co., Inc. (Sy Chi Siong, for short). The
parcels of land are more particularly described as
follows:

Owner

TCT No./

Lot No.

Total Area

(sq. m.)

Assessed Value of Entire Area

Affected Area

Assessed Value of Affected Area

Zonal Value of the Affected Area

Phil-Ville

243189

425

P45,900.00

425

45,900.00

P1,062,500.00

Sy Chi Siong

29737

8,425

P658,690.00

2,924

P228,606.47

P7,310,000.00

On January 3, 2001, petitioner filed a complaint
for expropriation before the RegionalTrialCourtofCaloocanCity for the
acquisition of the aforedescribed parcels of land. The case was
raffled to Branch 131 of that court.

After filing an Amended
Complaint to reflect the proper schedule of valuation of the properties sought to
be expropriated, petitioner deposited with the
Land Bank of the Philippines the amount of Two Million Three Hundred
Eleven Thousand Two Hundred Pesos (P2,311,200.00),
representing the total zonal value of the properties under expropriation.
Thereafter, it filed with the court a Motion for Issuance of Writ of Possession.

Both respondents
separately moved to dismiss the complaint on the main ground
that the trial court lacked jurisdiction over the res. However, in its
Order of April 3,
2002, the trial court denied both motions and asserted
jurisdiction over the case. In time, respondents separately moved for
reconsideration but their motions were denied by the court
in its subsequent Order of June 18,
2002. In the same Order, the court directed the
issuance of a writ of possession in favor of petitioner and required the
respondents to file their respective answers to the complaint.

Of the two respondents impleaded
as defendants in the complaint, only Sy Chi
Siong filed its Answer, thereunder reiterating the grounds
pleaded in its earlier motion to dismiss. In the
alternative, it prayed for just compensation.

As regards respondent Phil-Ville,
petitioner alleged that this respondent has yet to file its responsive
pleading to the complaint for expropriation.

Thereafter, petitioner
filed a Motion for Issuance of
Order of Expropriation and Appointment of Commissioners on the
rationale that the respondents had never challenged its right to expropriate their
properties subject of the suit.

In an Order dated January 27, 2005, the trial court, even as
it found the aforementioned motion meritorious,deferred
action on the petitioners prayer for an order of expropriation and instead set
the same motion for hearing on March 7, 2005 so that the parties may nominate
the commissioners who will ascertain and report to the court the just
compensation for the aforementioned properties. Partly reads
the Order:

The motion is impressed with merit.

It is worthy to mention that: The
right of eminent domain is usually understood to be an ultimate right of the
sovereign power to appropriate any property within its territorial sovereignty
for a public purpose [Republic vs. Court of Appeals, 383 SCRA 611, 2002].

An examination of the amended
Complaint clearly show the overriding necessity of expropriating the subject
properties in order to give way to the construction, rehabilitation and
expansion of the North Luzon Expressway, which is undoubtedly for public
purpose and benefit.

Premises considered, the Motion for
issuance of Order of Expropriation is hereby deferred pending final
determination of just compensation.

Meanwhile, let this case be set for
hearing on March 7, 2005 at 8:30 in the morning so that the parties may nominate
the commissioners who will ascertain and report to the court the just
compensation for the aforementioned properties. [Emphasis supplied]

On February 22, 2005, petitioner filed
a Motion for Partial
Reconsideration of the above Order, arguing that since the
case had been set for hearing on March 7, 2005 for the nomination of the commissioners
and necessarily for the conduct of hearing for the determination of just
compensation, it is proper that an order of expropriation be forthwith issued
before such determinationof just
compensation proceeds, citing, as basis therefor, Section
4, Rule 67 of the 1997 Rules of Civil Procedure, and adding
that where a defendant in an expropriation case raises only the issue of just compensation, the court should forthwith
enter an order of expropriation.

In an Order dated March 7, 2005, the trial
court denied petitioner's motion for partial reconsideration, to wit:

The Court is of the opinion that the
contentions of the counsel for the petitioner [are] exactly the opposite of
what the rules provide. The provision of the rules relied upon, Section 4 Rule
67 is quite clear that this Court may issue an order of expropriation declaring
that the plaintiff has a lawful right to take the property sought to be
expropriated, for the public use or purpose described in the complaint, upon
the payment of just compensation. Thus, just
compensation of the subject properties must first be determined and paid before
the Court can issue an order of expropriation.

Premises considered, the 'Motion for
Partial Reconsideration' is hereby DENIED for lack of merit. (Italics supplied).

Dissatisfied, petitioner
then went to the CA on certiorari,thereat docketed as CA-G.R. SP No. 89878,imputing
grave abuse of discretion on the part of the trial court in insisting on the payment
of just compensation before an order of expropriation may be
issued.

As stated at the threshold hereof, the
appellate court, in its herein assailed Decision dated January 27, 2006, upheld
the trial court. Partly says the CA in its challenged decision:

Jurisprudential law has already settled
that condemnation suits involve two stages: the order authorizing
expropriation, and the judgment on just compensation. An order of expropriation
is a court's resolution upholding the State's lawful right to take property
sought to be expropriated and thus forecloses any objection to the petitioner's
authority to expropriate for the public purpose stated in the complaint. This
is implied in Rule 67, Section 4. The order can be issued unless there are
objections and defenses against the condemnation proceedings that would require
the presentation of evidence, and only after an adjudication of these
objections and defenses can a court proceed with the second stage of the
expropriation proceedings.

However, under the circumstances at
bar, there is already no more issue as to the petitioner's authority to
expropriate and the propriety of its exercise, which the lot owners themselves
had acknowledged and admitted, and that the State has already been given the
right to enter upon and to use the lots. In fact, the project has already been
completed. We thus find no
grave abuse of discretion on the court's deferment of the issuance of the Order
of expropriation pending the determination of just compensation, for this is
not a major procedural flaw fatal to the action of the petitioner.

The only substantial
issue now is the amount of compensation. The court a quo merely aims to
secure its prompt adjudication and payment to the owners, and the order would only be a formality. Hence, the second stage of expropriation may proceed, the issuance
of an order in this case is
only a permissive one and discretionary on the part of the trial court. A
failure to issue an expropriation order is no bar at all to the State to wield
its power of eminent domain. In the case at bar, what will actually complete
the vesting of title in favor of the State is the actual payment of just
compensation to the owners of the condemned properties.

WHEREFORE, in view of the
foregoing, the instant petition is hereby DENIED. No
pronouncement as to costs. (Emphasis supplied).

SO ORDERED.

With its motion
for reconsideration having been denied by the CA in its equally assailed
resolution of April
10, 2006, petitioner is now with us via the
present recourse on the following submissions:

I

AN
ORDER OF EXPROPRIATION MERELY REQUIRES A DETERMINATION OF THE AUTHORITY TO
EXERCISE THE POWER OF EMINENT DOMAIN; ITS ISSUANCE DOES NOT HINGE ON THE
PAYMENT OF JUST COMPENSATION; AND

II

PAYMENT
OF JUST COMPENSATION IS NOT A CONDITION SINE QUA NON FOR THE ISSUANCE
OF AN ORDER OF EXPROPRIATION.

WE GRANT the petition.

Section 4, Rule 67 of the Rules of
Court provides:

Section 4. Order of
expropriation. - If the objections to and the defenses against the right of the
plaintiff to expropriate the property are overruled, or when no party appears
to defend as required by this Rule, the court may issue an order of
expropriation declaring that the plaintiff has a lawful right to take the property
sought to be expropriated, for the public use or purpose described in the
complaint, upon the payment of just compensation to be determined as of the
date of the taking of the property or the filing of the complaint, whichever
came first.

A final order sustaining the right to
expropriate the property may be appealed by any party aggrieved thereby. Such
appeal, however, shall not prevent the court from determining the just
compensation to be paid.

After the rendition of such an
order, the plaintiff shall not be permitted to dismiss or discontinue the
proceeding except on such terms as the court deems just and equitable.
[Emphasis supplied]

As is evident from the foregoing,
there are two (2) stages in every action for expropriation, namely:

1.Determination of the authority of the
plaintiff to exercise the power of eminent domain and the propriety of its
exercise in the context of the facts involved in the suit. This ends with an
order, if not of dismissal of the action, of condemnation [or order of
expropriation] declaring that the plaintiff has a lawful right to take the
property sought to be condemned, for the public use or purpose described in the
complaint, upon the payment of just compensation to be determined as of the
date of the filing of the complaint; and

2.Determination by the court of the just
compensation for the property sought to be taken.[3]

PetitionerRepublicis
correct in saying that an order of expropriation denotes the end of
the first stage of expropriation. Its end then paves the way for the second
stage the determination of just compensation, and,
ultimately, payment. An order of expropriation puts an end to any ambiguity
regarding the right of the petitioner to condemn the respondents
properties. Because an order of expropriation merely determines the authority
to exercise the power of eminent domain and the propriety of such exercise, its
issuance does not hinge on the payment of just compensation. After all, there
would be no point in determining just compensation if, in the
first place, the plaintiffs
right to expropriate the property was not first clearly established.

During the first stage, if the
defendant had denied or objected to the plaintiff's right to expropriate, a hearing
would have been held to decide upon whether the land was private,
and whether the purpose was, in fact, public.[4]However, once the objections and
defenses against the right of the plaintiff to expropriate are overruled, an
order of expropriation may issue. With all the more reason must
this be so when, as in this case, there is no contest
or objection by either of the herein respondentsas to the
petitioners right to expropriate.

Neither respondent raised an issue as
to petitioner's right to expropriate its parcels of land, or the
public purpose of the expropriation. For sure, respondent
Phil-Ville even allowed petitioner unimpeded entry and unlimited access to the
portion of its property under expropriation for the eventual construction,
completion, operation and maintenance of the North Luzon Expressway Project.

After the trial court determined the
right of petitioner to condemn the subject properties for the expansion and
rehabilitation of the North Luzon Expressway, the first stage of the
expropriation proceedings should have been properly terminated with the
issuance of an order of expropriation declaring that petitioner has the right
to take the properties.

To
stress,payment of just compensation is not a condition sine qua
non to the issuance of an order of expropriation. In expropriation
proceedings, it is the transfer of title to the
land expropriated that must wait until the indemnity is actually paid.[5] This is
made all the more clear when note is taken of the second
paragraph of Section 4, Rule 67, supra, which
states that the defendant may appeal from the order of expropriation by filing
a record on appeal, which appeal does not prevent the
court from determining the just compensation to be paid.

Further, a perusal of Section 5,
Rule 67 bolsters this point:

Section 5. Ascertainment of
Compensation. - Upon the rendition of the order of expropriation, the court shall
appoint not more than three (3) competent and disinterestedpersons as commissioners to ascertain and report
to the court the just compensation for the property sought to be taken. x x x

Clearly, it is after the
rendition of the order of expropriation that the court shall appoint
commissioners to ascertain the just compensation for the property sought to be
taken.

WHEREFORE, the
petition is GRANTED and
the assailed decision and resolution of the Court of Appeals are ANNULLED and SET ASIDE. Accordingly, the trial court is directed to issue an
order of expropriation in favor of petitionerRepublic.

No costs.

SO ORDERED.

CANCIO C. GARCIA

Associate Justice

WE CONCUR:

REYNATO S. PUNO

Chief Justice

Chairperson

ANGELINA SANDOVAL-GUTIERREZ

Associate Justice

RENATO C. CORONA

Associate Justice

ADOLFO S. AZCUNA

Associate Justice

C
E R T I F I C A T I O N

Pursuant
to Section 13, Article VIII of the Constitution, I certify that the conclusions
in the above decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Courts Division.